COVID-19 Self-Employment Income Support Scheme CIOT/ATT Webinar Tuesday 7 July 2020 9.45am – 11.15am
Presenters • Rich chard W Wild Head of the CIOT’s Technical Team • Margaret C Curran CIOT Technical Officer • Em Emma R Rawson on ATT Technical Officer
Agenda Our second webinar on the COVID -19 Self-Employment Income Support Scheme (SEISS) will provide a recap of the scheme and a look at what’s new. We will cover: – Key dates for first and second grants – Who is eligible and who isn’t – What ‘adversely affected’ by coronavirus means – How to calculate the grants – How to claim the grants – Compliance aspects Followed by a Q&A session at the end.
Housekeeping points • Please email questions in as we go along to www.sli.do Event code #9110 110 • A recording of the webinar and the slides will be available on our websites after the end of the webinar • Follow up questions to technical@ciot.org.uk or atttechnical@att.org.uk
Overview of the SEISS • Scheme to provide support to self-employed workers affected by the coronavirus outbreak • Can continue to work, start a new trade or take on other employment • HMRC identify who is eligible to claim and work out the amount of the grants based on tax return data already held • Grants are subject to Income Tax and Class 4 NIC • Being extended with a second and final payment from August
First SEISS grant • Up to a maximum of £7,500 • Paid in single instalment • Worth 80% of average monthly trading profits • Covers 3 months’ worth of profits • It’s NOT linked to a specific period (NOT March, April & May 2020) • Must be “adversely affected” on or before 13 July 2020 • Must make your claim on or before 13 July 2020
Second and final SEISS grant • Up to a maximum of £6,570 • Paid in single instalment • Worth 70% of average monthly trading profits • Covers 3 months’ worth of profits • It’s NOT linked to a specific period (NOT June, July & August 2020) • Must be “adversely affected” on or after 14 July 2020 • Can claim second grant even if didn’t claim first • Claims process opens on 17 August • Must make your claim on or before 19 October 2020
Eligibility – who qualifies? Qualifying person • carrying on a trade that has been adversely affected by the coronavirus outbreak, • submitted tax return for the tax year 2018/19 (and other relevant years) to HMRC on or before 23 April 2020, • traded in the tax years 2018/19 and 2019/20, • intend to continue to carry on a trade in the tax year 2020/21, • be an individual, and • meet the profits condition.
Eligibility – adversely affected • Same qualifying conditions for both grants BUT UT • Must have been adversely affected by coronavirus on or before 13 July 2020 to claim the first grant • Must be adversely affected by coronavirus on or after 14 July 2020 to claim the second and final grant
Adversely affected HMRC G Guida dance You are unable to work because you: – Are shielding – Are self-isolating – Are on sick leave because of coronavirus – Have caring responsibilities because of coronavirus • You’ve had to scale down or temporarily stop trading because: – Your supply chain has been interrupted – You have fewer or no customers or clients – Your staff are unable to come in to work – one or more of your contracts have been cancelled – you had to buy protective equipment so you could trade following social distancing rules
Adversely affected • Question of fact • Not a financial or economic test • Based on knowledge at date of claim • Not what happens later • Evidence
Adversely affected – example 1 Affected b both th up up to a and a after 13/ 13/14 14 July 2020 2020 Pam is self-employed running a small restaurant. • 20 March - restaurant shuts, staff furloughed • 15 April - opens for takeaway food only • Before 4 July – prepares for re-opening for dine-in customers • 4 July onwards – re-opens under Govt social distancing guidelines There are adverse effects in both periods. Pam can claim both grants.
Adversely affected – example 2 Adverse sely affected u up to 13 13 July 2020 2020 but not a t after Andy is a self-employed window cleaner. • 18 March – stops working completely • Mid- May – starts working again for some clients • By 13 July – working as normal The adverse effect relates wholly to the period before 13 July 2020. There was no new adverse effect on or after 14 July 2020. Andy can claim the first grant but not the second.
Adversely affected – example 3 Adverse sely a affected up to 13 13 July b but not n nec ecessa ssarily a after Raj is a self-employed electrician. • 23 March – stops working completely • 15 April – contract for September 2020 is cancelled • By 13 July – otherwise working again as normal Raj can claim the first grant. He will only be able to claim the second grant if there is an adverse effect on or after 14 July 2020.
Adversely affected – example 4 Adverse sely a affected up to 13 13 July b but not a after er Janet is a self-employed copywriter, working from home. • 23 March – continues to work from home during lockdown • Before 13 July – several sales invoices long overdue • By 31 August – all outstanding sales invoices paid Janet can claim the first grant because she was adversely affected when she made her claim even though the invoices were later paid. She can’t claim the second grant because there was no adverse effect on or after 14 July 2020.
Adversely affected – example 5 Adverse sely affected a after 14 14 July but not t before Leroy is a self-employed lorry driver. • Before 13 July – works as normal despite fear work might dry up • August – contract with farming client for September cancelled due to coronavirus affecting recruitment of workers to pick crops Leroy can’t claim the first grant as he was not actually adversely affected before 13 July. Anticipating a future adverse effect is not enough to meet the qualifying condition. But he can claim the second grant as there was an actual adverse effect on or after 14 July 2020.
Who doesn’t qualify? • Not adversely affected by coronavirus • Started trading during 2019/20 or later • Didn’t file 2018/19 tax return by 23 April 2020 • Completed tax return incorrectly • Directors of limited companies • Trustees • Furnished holiday lettings businesses
Special cases • Loan charge • Resident outside the UK, or on remittance basis • Averaging (farmers and creative industries) • Military reservist • Parental leave
Parental Leave • Rules extended for parental leave • Now eligible if – Don’t qualify already – Parental responsibility & caring for child aged under 12 months – Pregnancy or maternity • Look at 2017/18 & 2016/17 tax returns only • Claim first & second payment on or before 19 October 2020 • Separate claims process • If qualify already, this change does not affect amount claimed
Eligibility for the SEISS – profits condition • Need: – Average trading profits more than nil but no more than £50,000; and – Total trading profits at equal to or more than total non-trading income. • HMRC will first look at your 2018 to 2019 Self Assessment tax return • If you’re not eligible based on the 2018 to 2019 Self Assessment tax return, HMRC will then look at the tax years 2016/17, 2017/18, and 2018/19 depending on which years you traded in.
Trading profits • Based on SA return with no pro-rating for partial years • After: – allowable expenses – the trading allowance – capital allowances • Before: – averaging claims – losses brought forward – personal allowance • If more than one trade, add profits / losses together.
Non-trading income • Earnings • Property income • Dividends • Savings income • Pension income • Miscellaneous income (including social security income) • NOT capital gains
Calculating the grant • Based on three months worth of the first of these to apply: 1. Average trading profits of 2016/17, 2017/18 and 2018/19 2. Average trading profits of 2017/18 and 2018/19 3. Trading profits of 2018/19 • Figure used will depend on which years the individual traded in
First grant vs second grant 1 st grant: • Lower of £7,500, and 3 x (TP x 80%) 12 2 nd grant: • Lower of £6,570, and 3 x (TP x 70%) 12
Example 1 - eligibility Lakshmi was trading in 2016/17, 2017/18 and 2018/19 2016/ 2016/17 17 2017/ 2017/18 18 2018/ 2018/19 19 To Total Trading profits 55,000 55,000 45,000 155,000 Non-trading income 20,000 10,000 20,000 50,000 Total income 75,000 65,000 65,000 205,000 Trading profits for 2018/19 = £45,000 so equal to or less than £50,000 Trading profits for 2018/19 are greater than non-trading income so Lakshmi will qualify for the SEISS.
Example 1 – amount of grants 2016/ 2016/17 17 2017/ 2017/18 18 2018/ 2018/19 19 Avera rage Trading profit / (loss) 55,000 55,000 45,000 51,667 First grant = lower of Second grant = lower of - £7,500, and - £6,570, and - 3 x (51,667 x 80%) = £10,333 - 3 x (51,667 x 70%) = £9,042 12 12 Lakshmi will receive £7,500 in the first grant and £6,570 in the second grant
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